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Legalized Marijuana in New York State: The Green Gold Rush

Andrew Cuomo unveils a plan for legalizing recreational marijuana in New York State.

Image source: Pixabay.

It’s a moment cannabis advocates have been waiting for. On Tuesday, Governor Andrew Cuomo officially unveiled a plan for legalizing recreational marijuana in New York State, in his State of the State budget address in Albany.

The plan includes the creation of a new Office of Cannabis Management, taxes on cultivation and wholesale, a ban on sales to anyone under 21, licensing for businesses throughout the supply chain, and the ability for counties and cities to ban sales, Gannett’s Jon Campbell reports. Also in the works: a program to review and seal past marijuana-related criminal convictions.

Officials estimate that legalization will eventually bring in $300 million in tax revenue a year, but the industry will be slow to ramp up, the New York Times reports:

That number, though, would not be available until the fiscal year starting in 2023, according to Mr. Cuomo’s budget director, Robert Mujica.

The initial rollout would bring in much less revenue, projections show. Budget documents released Tuesday projected no revenue from marijuana regulation and taxation for the 2020 fiscal year, and $83 million for 2021.

A code name for marijuana written on a train in New Jersey. Source: Wikimedia Commons.

Keeping Up With The Joneses

With more and more states moving toward legalization, the climate around cannabis is shifting quickly. Politicians who would have been loath to endorse recreational marijuana just a few years ago are now starting to worry that their states will lose out economically if they don’t jump on board the legalization bandwagon.

New Jersey, whose governor Phil Murphy campaigned on a promise to legalize recreational marijuana, is racing New York to pass a cannabis law. Reporter Payton Guion for NJ.comexplains why New Jersey legislators are anxious to get there first: 

If New Jersey were to somehow get beat to legalization by New York, the state would be leaving a lot of potential tax revenue on the table. Millions of people would likely cross the border to buy legal weed, based on estimates of New Jersey’s potential marijuana market.

But no one is likely to cross the border to buy weed in New Jersey if it’s also legal in New York. 

While our neighbors New Jersey and Connecticut have yet to legalize, New York is already losing potential business–and tax dollars–to Massachusetts, where recreational cannabis has been legally available since November. Recently, Rockland/Westchester Journal News columnist David McKay Wilson, who writes about tax policy, took a road trip to Northampton, home to Massachusetts’s first legal dispensary. There, he met New Yorkers willing to stand in line for hours for the chance to purchase just an eighth of an ounce:

The New Yorkers claimed they could find marijuana on the streets of Schenectady for $150 an ounce, which would produce about 60 marijuana joints. That cost would be far less than what they would pay in the Massachusetts dispensary. Though state law allows dispensaries to sell as much as one ounce of cannabis, NETA has limited its sales to a maximum of one-eighth of an ounce because its supply of Massachusetts-grown marijuana is limited.

The one-eighth ounce was on sale for $50–equivalent to $400 an ounce. But they wanted to buy the legal cannabis, with its potency tested and certified. 

“It better be good stuff for this wait,” [Johnny] Deitz said. “It will be a joy to finally smoke it legally.” 

Cannabis isn’t the first vice New York State has seized on as a potential boost to the local economy. In recent years, the state has rewritten the laws on locally made beer, hard cider, and spirits to be friendlier to small brewers and distillers. The result has been a renaissance of small-scale craft beer and spirits in the state.

In an interview with Leafly, Melissa Moore of the Drug Policy Alliance, a pro-cannabis-legalization advocacy group, likens the recent push to legalize cannabis to the craft brewing and distilling movement:

“I think it’s encouraging to look at what the governor has done in terms of encouraging the craft beer and wine industry in New York State, and trying to put forth provisions that help smaller businesses in that arena be able to actually get a foothold to be competitive and grow and thrive,” Moore said. “And I think that’s something that we would certainly encourage him to look for in marijuana legalization as well.”

NYS Assembly ChambersCredit: Source: Wikimedia Commons.
The chamber of the New York State Assembly, soon to be tasked with hammering out the fine print on marijuana legislation. Source: Wikimedia Commons.

Bumps in the Road?

Even with a cannabis-friendly Democratic majority in both the Senate and Assembly, and the endorsement of the governor, legalized recreational marijuana won’t happen overnight. There are still many details to be ironed out. The AP’s David Klepper reports:

Taxes and regulations must be approved. Rules for licensing retailers must be written. A new government entity may have to be created. Local governments will have to be brought in. Even after a bill passes, it could take a year or more for any pot shops to open, based on what’s happened in other states and New York’s own experience with medical marijuana.

One of the biggest worries for lawmakers is how to deal with marijuana-impaired drivers. There’s no clear consensus on what level of THC in the blood constitutes impairment, and unlike alcohol, marijuana can leave trace substances in a person’s blood for days or weeks, long after the initial high has faded. States are enacting a broad range of different laws and “playing catch-up” with science on the issue, Kaiser Health News reports.

Among the states that have legalized recreational marijuana, there is a range of approaches, from relatively permissive California to highly regulated Colorado. So far, New York has opted to keep the marijuana industry on a tight leash: After the state legalized medical marijuana in 2014only five licenses were awarded in an intensely competitive process. In 2017, five more companies were awarded licenses.

One of those first five license-winners has deep roots here in the Hudson Valley: Etain, a company with dispensaries in Kingston, Syracuse, Yonkers and New York City, and the state’s only women-owned cannabis business. Founder Amy Peckham, who owns and operates the business with her daughters Hillary and Keeley Peckham, is a Katonah resident whose family operates a large construction business called Peckham Industries.

Getting into business in New York State isn’t easy. Just to apply for one of the state’s five coveted licenses cost the Peckhams about $750,000,The Cutreported in a 2015 feature story.

The first few years of legal medical marijuana have been tough on New York’s pioneering cannabis businesses, with few physicians to prescribe and daunting restrictions on every aspect of the business, but Etain’s founders hope to make good on their investment. Recently,The Street cited Etain as one of the top five businesses that stand to profit most from legalized recreational marijuana in New York State.